CHAPTER 2 Boosting Teacher Effectiveness Eric A. Hanushek Over the last two decades, research on student achievement has pin- pointed the central role of teachers. While other factors—­families, peers, neighborhoods—are obviously elements in a student’s learn- ing, it is the school and particularly the teachers and administra- tors who are given the public responsibility for the education of our youth. There is a general consensus that improving the effective- ness of teachers is the key to lifting student achievement, although questions remain about how best to do this. A key element in focusing attention on the importance of teacher effectiveness was research that took an outcomes-based perspective.1 By looking at differences in the growth of student achievement across different teachers instead of concentrating on just the background and characteristics of teachers, it was possi- ble to identify the true impact of teachers on students. This work, now generally called value-added analysis, demonstrated that some teachers consistently get greater learning gains year after year than other teachers. In fact, the average learning gains associated with a teacher provide a convenient metric for teacher effectiveness. Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. FinnSousa_WhatLiesAhead.indb 23 12/19/13 8:15 AM 24 Boosting Teacher Effectiveness We now have a substantial number of studies that indicate clearly how much difference teacher effectiveness makes to student outcomes. In one study of mine, teachers near the top of the qual- ity distribution got an entire year’s worth of additional learning out of their students compared to those near the bottom.2 That is, a good teacher will get a gain of 1.5 grade level equivalents while a bad teacher will get 0.5 year during a single academic year. Impor- tantly, this analysis considered kids just from minority and poor inner-city families, indicating that family background is not fate and that good teachers can overcome deficits that might come from poorer learning conditions in the home. A second perspective comes from combining existing quantita- tive estimates of how differences in teacher quality relate to achieve- ment gaps by race or income.3 Moving from an average teacher to one at the eighty-fourth percentile of teacher quality (i.e., moving up one standard deviation in teacher quality) would close some- where between one-quarter and one-third of the average gap in math achievement between kids eligible for free and reduced-price lunches and those with higher incomes. Said differently, having a good teacher as opposed to an average teacher for three to four years in a row would, by available estimates, close the achievement gap by income. Closing the black-white achievement gap, which is a little larger than the average income gap, would take good teach- ers three and a half to five years in a row. Perhaps the most valuable way to see differences for the sub- sequent discussion of salaries is to calculate the impacts of effec- tive teachers on the future earnings of students.4 A teacher who raises the achievement of a student will tend, other things being equal, to raise earnings throughout that student’s work life. We can in fact calculate the economic impact on the student from anal- yses of how achievement translates into higher incomes. Using 2010 earnings, for example, a teacher in the seventy-fifth percentile would on average raise each student’s lifetime income by somewhat Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. FinnSousa_WhatLiesAhead.indb 24 12/19/13 8:15 AM ERIC A. HANUSheK 25 FIGURE 1. Impact on Student Lifetime Incomes by Class Size and Teacher Effectiveness (compared to average teacher) $1,000,000 90th percentile teacher $750,000 $500,000 75th percentile teacher $250,000 Impact on Student Lifetime Earnings 60th percentile teacher $0 5 10 15 20 25 30 Class Size more than $14,300 when compared to the average teacher. (All cal- culations are based on present values at the time of high school grad- uation where future incomes are discounted at 3 percent per year). But, this is not fully what the seventy-fifth percentile teacher con- tributes, because each student in the class can expect the same enhanced income. Thus, with a class of twenty-five students, this teacher would add $358,000 in future income compared to an aver- age teacher. Figure 1 shows the total contribution of teachers at the sixtieth, seventy-fifth, and ninetieth percentile of teacher effectiveness with varying class sizes. Excellent teachers add over $800,000 to the future incomes of students in a class of thirty. Even a teacher just above average at the sixtieth percentile would add over $100,000 to a class of twenty students. These are calculations for each school year. Each and every year throughout their careers that these above-average teachers are Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. FinnSousa_WhatLiesAhead.indb 25 12/19/13 8:15 AM 26 Boosting Teacher Effectiveness teaching adds hundreds of thousands of dollars to their students’ future incomes. They also parallel a recent set of direct estimates of income effects that comes from linking teacher “value-added” to income tax records.5 But, there is the darker side. Below-average teachers are sub- tracting from student earnings at a similar rate. The tenth per- centile teacher, compared to an average teacher, subtracts over a half million dollars per year for each twenty students he or she teaches. For the tenth, twenty-fifth, and fortieth percentile teacher, one simply has to put a minus sign in front of the values seen in figure 1. From these different perspectives, the answer is the same: teach- ers have an enormous influence on students and on their futures. Of course, there are two ways to look at the policy relevance of these figures. One is to assume that the current stock of teach- ers is fixed so that it is all just a zero-sum game—what one student gains, another student loses by being stuck with a below-average teacher. In such a case teacher policy would amount to deciding one way or another who gets the good teachers and who gets the bad teachers. It could, for example, be decided by market forces that allocate teachers to schools, or it could be decided by regula- tory approaches, perhaps emanating from court cases and the like. When viewed as just a distributional issue, the country as a whole would be no better off in terms of overall productivity by potential policy changes (even if the outcomes were viewed as more just). This result is not consistent with the primary concerns about education that relate to the overall productivity and output of the nation. The second way to look at the prior calculations is more consis- tent with our investment notions about education. The impact of teachers on lifetime earnings is meant to signal how the productiv- ity of individuals changes with different skills. The figures indicate the gains that would accrue to having more teachers of the type Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. FinnSousa_WhatLiesAhead.indb 26 12/19/13 8:15 AM ERIC A. HANUSheK 27 found in the top of the current effectiveness distribution. Similarly, they indicate the gains that would accrue to having fewer teachers near the bottom of the current distribution. In other words, a pol- icy that increased the average quality of the teacher distribution from that currently in place would yield potentially large overall gains to the economy (and potentially improve distributional mat- ters at the same time). To illustrate this, I have used the information available about the varying effectiveness of the teacher force to understand the aggre- gate impact of policies aimed at eliminating the worst teachers (an issue with direct policy implications as discussed below). I have pro- jected the achievement impact of replacing varying percentages of the bottom teachers with average teachers.6 By eliminating just the bottom 5–8 percent of teachers, the available research suggests that US achievement could climb to the level of Canadian achievement (as measured by international assessments of math and science). Paul E. Peterson, Ludger Woessmann, and I have developed the economic implications of improving achievement to the level of Canada.7 This analysis is based on the strong impacts of worker skills on future economic growth. It suggests that all workers in the United States could, by historical results, expect an average increase in their paychecks of 20 percent for each of the next eighty years. An alternative way to look at this is that the current fiscal problems could be readily solved by improved education that led to improved growth. Clearly, similar to the individual findings, there are substantial economic gains that seem apparent from policies that upgrade the quality of teachers. While less well-developed, an increasing body of evidence points to the importance of principal quality.8 The currently available research, based on the value added by a principal to achievement of students in the school, indicates that the principal may have an impact on achievement similar to that of teachers, although the principal affects the entire school. Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. FinnSousa_WhatLiesAhead.indb 27 12/19/13 8:15 AM 28 Boosting Teacher Effectiveness Current Policy Discussions Policy debates have changed swiftly to incorporate the research evi- dence on teachers.9 It is difficult to enter into any school policy dis- cussion that does not touch on the issue of teacher quality.